Three tried-and-tested strategies to reach your financial goals fast
We all want more financial security, but the steps we take to achieve it usually depend on our age and circumstances. But by breaking down our financial goals into short, medium, and long-term targets, we can plan accordingly.
So whether you’re in need of a quick fix, or a more long-term strategy, here are some great ideas on how you can take control of your finances.
Short term financial goals
(Less than 2 years)
Pay off the bills
Finding ways to cut costs, especially household bills, can be straightforward. A lot of people simply shop around for the best deals on utilities and then think “job done”. Bad idea.
Review each package regularly and check if it’s still good value for money. Cancel anything you don’t use (such as TV, gaming, or music subscriptions). And if you’re tied into a contract you’re desperate to get out of, you might find a different provider will buy you out of your contract if you make the switch (this is common among energy suppliers, for example).
Build an Emergency Fund
Accidents happen. Your car may stop working or your boiler break down. If your financial goal is security in times of need, build an emergency fund.
Consider depositing some of your savings into a high-interest savings account. Or if you’d like to dip your toe into secured P2P lending, deposit in our Flex account and earn 5% (as of 7 Jan 2020, the Flex rate is 4%) APY.
As a general rule, having funds in place to cover a three to six month period is a good benchmark.
Medium term financial goals
(Between 3 and 5 years)
Invest and earn a passive income
Investing is a great form of wealth creation — especially when you don’t have to work hard for it. Both high yield savings and taxable investment accounts can work nicely, but they often require a sizable deposit, and online transfers from your checking account to your savings account can be slow.
A better alternative could be a peer-to-peer lending platform, and if that’s the case, you might want to give us a try. With Constant you’re be able to invest as little or as much as you like, you choose the interest rate, and there are no hidden fees.
Depending on your level of debt, this could be a short, medium, or long-term financial goal. But you’ll still need a strategy and below is a popular method:
- First, list your debts according to amount, with the smallest at the top.
- Then work out how much money you have left each month after living costs.
- Take that extra money and start using it to pay off that first debt.
- Focus your energy on that debt and maintain minimum payments on the ones below it.
- Once it’s paid off, add the freed up money to your initial payment amount.
- Apply your new total to the next debt on your list.
Over time, you should be able to pay off your debts faster because your payments will become bigger as each debt is cleared. This is known as a snowball plan.
Long-term financial goals
(5 years plus)
Plan for retirement
The ultimate financial goal is comfort and security during your later years — so plan ahead. Check if your employer offers a retirement plan as part of their overall package, and see if they’ll match your contributions, which will increase your savings. Retirement plans often include tax benefits too.
If you have a high-deductible health plan, combining it with an HSA (Health Savings Account) is also an option. They cover a wide range of medical services and are tax free for both you and a contributor — which could be your employer or a relative.
Make your dream a reality
What is your dream? Be specific. Then develop a suitable budget and timeframe.
Let’s say you want to take that dream holiday a few years from now. The earlier you start to plan for it the better. Where do you want to go? What about accommodation prices? Flights? Spending money? Turn this into a ballpark figure and then compare it to both your earnings and projected savings.
If you can put away $50.00 per week for two years you’ll have close to $5000, and if you have a partner who can do likewise you’ll have double that. But if you’re still short then perhaps you need to rethink your timeframe.
Although useful, these are not hard and fast rules. What might be a short-term goal for you could be a long-term ambition for others. And yes, It’s good to have dreams, but you need to stay grounded, have a solid plan, and manage your day to day expenses — otherwise your dreams will remain exactly that.
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